Even though last week’s rumored sale of the Mirage hotel/casino to Penn National turned out to be just a rumor, MGM Mirage’s new CEO, James Murren, said he plans to dramatically reduce company debt and will consider further casino sales as he overhauls the firm’s balance sheet.
In addition to selling resorts such as the announced sale of Treasure Island last month, Murren plans to refinance maturing bonds and may buy back some notes traded at discounted levels.
"We’re going to pull every lever we feel like we should pull to strengthen this company, to not only weather the recession, but come out of it stronger," Murren told Bloomberg News in an interview last week. "We are certainly not looking to aggressively sell assets, but the point is that we do have assets that are attractive and we are going to be very responsive."
MGM last month agreed to sell Treasure Island to Phil Ruffin for $775 million. Murren described the deal as "good" for both parties, and noted that Ruffin approached MGM about the transaction.
Murren became MGM’s CEO and chairman in November after former CEO Terry Lanni resigned. Lanni said in an October interview that the company was "not contemplating" any asset sales.
But the economic landscaped has worsened over the past few months. Revenues in Las Vegas and Macau have declined sharply, and MGM is heavily mortgaged and has to deal with financing of its CityCenter project in Las Vegas.
Last week, MGM announced it was canceling, at least for awhile, the opening of one CityCenter hotel and scrapped condominium developments. Canceling the condos will save about $200 million, with another $200 million in investments deferred until the $11.2 billion project is completed at the end of the year.
MGM and its partner Dubai World still need to raise about $1.2 billion to complete CityCenter, but Murren said the lending market appears better in 2008.
"I don’t think anyone was raising money in the bank market in the fourth quarter of 2008," Murren said.Related Articles:
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